Gold at a two-month high, breaks key level

 

Gold prices are at a two-month high this morning, tracking the euro upwards.  VTB Capital analyst Andrey Kryuchenkov said, “A break above $1,630 is very significant, as we breach the June-July and early August range.  Buy orders were triggered, with the dollar index also slipping below support … at early July lows.  This is on speculation that the ECB will act.”  Kryuchenkov went on to say that as normal, Gold is trading against the dollar in this case.

Today’s trading aside, the dollar has enjoyed a rally lately on risk aversion.  However, that could all be undone, and the culprit could be the Federal Reserve.  Simon Derrick of BNY Mellon said, “If you look at the dollar’s performance over the last few years when quantitative easing (QE) was introduced, the dollar was absolutely weaker… were they to reintroduce QE, would that reintroduce dollar weakness?  Absolutely.”  Investors are looking to the Jackson Hole Economic Symposium, scheduled for next week, for a sign that another round of QE is on the horizon.

Today’s rally in the euro could be things getting better for the euro before they get worse.  Jane Foley of Rabobank International said, “The market may be optimistic that the (European Central Bank) will act to subdue peripheral yields in September, but that implies that there is plenty of scope for disappointment.”  This scope for disappointment is something that is common when the market pre-prices events such as central bank interventions that don’t always see the light of day.

At 9:34 a.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,638.80, Up $17.40.
  • Silver, $29.31, Up $0.61.
  • Platinum, $1,507.00, Up $7.80.
  • Palladium, $621.80, Up $12.60.

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